It is probably a familiar experience to many that when you walk into a room full of internal auditors, it is with a little bit of apprehension and perhaps even a modicum of fear. Today I had a curious experience where I addressed a room full of members of the Institute of Internal Auditors and as the feedback from the talk is coming in it’s becoming quite clear that I’ve scared the bejeezus out of a number of them. Here are the slides that did the damage.
Some delicious irony aside, what was the issue that got so explosive? In a word: blockchain. It is worth notice that the culture of the audit profession is expressed through language including core terms like risk, fear, assurance, control, fear, mitigation, fear, regulation, fear, carrots and sticks. The focus is internal (the clue is in the name) which means it requires additional effort to look up and be aware of external environmental threats. When I suggested that there was an emerging technology that could successfully distribute trust without the need for a central controlling authority in pretty much any domain, there was a noticeable shift in energy in the room.
This has stimulated some fascinating discussions during lunch about the implications for an industry that potentially faces an existential level threat from essentially a new algorithm. I’m not certain that blockchain completely eliminates the need for certain audit functions, but the industry certainly needs to pay attention and figure out how to adapt. This is the main new risk, and the audit industry currently appears to have no mitigation or assurance strategies in place to handle, much less control it.
If you’re interested in getting your head around the blockchain concepts and technology, I can’t think of a better person than Melanie Swan to be your guide into this fascinating world, that sooner or later will fundamentally transform all of our lives…
https://www.youtube.com/watch?v=UzIQ3dPf_XA